Treasury Yields Jump On Release Of Fed Minutes

By Michael Aneiro

Treasury yields just spiked immediately after the release of the Fed’s latest policy committee meeting minutes. The ten-year note, which had recovered to unchanged on the day at 2.814% right before the minutes’ release, is now down 12/32 in price to yield 2.862%, per Tradeweb data.

One thing to remember about the market reactions to Fed meeting minutes is that it usually morphs through the course of the next hour or so – the minutes defy a quick, easy algorithmic read and instead the market interpretation tends to progress through the afternoon as people actually read the full text. (See, for example, how gold immediately freaked out a little before changing its mind.)

That said, early reads are somewhat bearish and seem to suggest the Fed is more comfortable with the idea of tapering. Here’s Peter Tchir of TF Market Advisors:

It seems like tapering is coming. The Fed still seems a bit concerned about growth and not at all afraid that inflation is coming in any which way. We will see what is priced in, but I think we will see pressure on the 10 year treasury, possibly driving it to 3%. That will drag down corporate bonds, push CDS wider and ultimately pull stocks down as well, led by dividend stocks.

The market is giving the best impression that this is priced in, but too many were looking for a bounce into or after the numbers, that I just don’t think we will get it, and the day will end worse than it is now.